Walmart vs. Visa — With Apple Pay caught in the middle

Credit card transaction rates are still a contentious point with merchants and retailers and newer digital wallets like Apple Pay and the forthcoming CurrentC developed by the consortium known as MCX, which counts Rite Aid, CVS, and Walmart among its members, are caught in the middle. The issue brought up at the recent Money 2020 conference is how systems like Apple Pay handle card transaction rates between in-store and in-app purchases, and it was an issue raised by Walmart executive Mike Cook during a Q&A session.

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Walmart's Cook brought up an interesting point during his question, stating that if Apple Pay is secure, then why would merchants, like his company Walmart, be charged a credit card present rate, which is a much lower transaction fee, for in-store purchases through NFC, but then for in-app purchases be charged a higher transaction fee designated by a card not present rate.

The Visa exec responded to that question stating that it worked out that way because in-store transactions utilize one system while in-app purchases utilize another system.

Re/Code went as far as saying that the discrepancy between credit card transaction rates is a reason "why Walmart will never accept Apple Pay."

When you watch the interaction between Cook, one of the biggest champions of MCX, and Visa's McCarthy, this should come as no surprise. Nor should the realization that Walmart will never accept Apple Pay, the service that the credit card networks support.

As a member of MCX, Walmart's CurrentC standard, which competes with Apple Pay, would tap into bank accounts, rather than credit cards, for lower transaction rates than what credit cards charge. MCX denies that credit card rates and fees are reasons why it doesn't support Apple Pay, choosing instead to play up loyalty rewards and ease of use.